Moore Stephens prepares for invasion of middle ground

Mid-market accounting firm
Moore Stephens
is moving swiftly to cut costs, build brand recognition and centralise decision-making to combat what it sees as a permanent shift by top-tier firms into its market.

The new strategy is a precursor to a co-ordinated national growth strategy, including a likely change to ­profit-sharing arrangements between its offices down the track.

Managing director
Marco Carlei
and new chief operating officer
Peter ­Antonius
say they should rank among the top eight-earning accounting firms given their expertise, with revenue in excess of $160 million, but expect to concentrate on smaller clients.

“The big four are really aggressive in the mid market," said Mr Antonius. “The larger end is getting smaller, with the transaction [decision]-making being moved offshore at the top end of town."

It is standard practice for big four firms
PwC
,
EY
,
KPMG
and
Deloitte
to drop down into the mid-market, discounting heavily to win and hold staff when trading conditions are tough. When things improve, they abandon this market and return to servicing blue-chip clients.

But the shift down looks permanent this time, said Mr Antonius.

Led by Deloitte Private, Mr Carlei says the strategy of the big firms is now to offer consulting services and then “upsell" clients to compliance work that the smaller firms normally do.

Moore’s backs specialisation, cost-cutting

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Moore’s response is to also do more consulting work, but in specialist areas, including education, auto dealers and property trusts, as well as cutting costs.

Moore’s is also trimming costs in the back office, offshoring work and sharing operational expenses across the national group.

Mr Antonius said it was likely Moore’s would be serving clients with annual revenue under $200 million in future, with bigger firms poaching the clients they now have above that size.

Moore Stephens’ Australia revenue slumped 17 per cent to $112 million in the 2012-13 financial year, and its ranking fell from 9th to 11th, according to the BRW Accounting 100.

But Mr Carlei said this was due to the exclusion of a “regional correspondent firm" that was no longer part of its network last year, and revenue had been growing by 15 per cent a year.

Mr Antonius has been brought on to drive the nationalisation of Moore’s eight separate practices, starting with centralising its back-office systems and staff to reduce costs and break down communication barriers between the firm’s 800 staff and 100 partners.

“We have no common human resources, business development, information technology, or customer relationship management systems," Mr Antonius said. “At the moment, we do not have the ability to leverage any of these things as well as we should."

Mr Boyd led the nationalisation of Deacons in Australia before it merged with international law firm Norton Rose.

Mr Carlei and Mr Antonius said the Moore Stephens brand did not have the recognition it deserved, and that was partly due to the lack of centralisation, as well as very little co-ordinated promotion of the company’s talent in the media.